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Equities

North American markets roared out of the gate Thursday with positive signals from China over the continuing trade dispute with the United States helping ease investors’ nerves.

At 9:31 a.m. ET (13:31 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 99.5 points, or 0.61 per cent, at 16,371.15.

In New York, the Dow Jones Industrial Average rose 212.99 points, or 0.82 per cent, at the open to 26,249.09.

The S&P 500 opened higher by 22.43 points, or 0.78 per cent, at 2,910.37. The Nasdaq Composite gained 88.90 points, or 1.13 per cent, to 7,945.78 at the opening bell.

Early Thursday, markets got a boost when China’s commerce ministry spokesman Gao Feng told reporters that Beijing hopes China and the United States can cancel planned additional tariffs to avoid escalating the current trade war. He said it was important “to create necessary conditions for both sides to continue negotiations.” The two sides are scheduled to meet again in September.

“The largely hopeful tones of the update from China has lifted market sentiment, and that sparked buying this morning,” David Madden, markets analyst with CMC Markets U.K., said. “U.S.-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market.”

Also bolstering market sentiment was a potential end to Italy’s most recent political drama. Efforts to create a coalition government could stave off the possibility of a snap election. The two sides still need to agree on a shared platform and ministers, although 5-Star chief Luigi Di Maio and his PD counterpart Nicola Zingaretti said they had pledged to find common ground for the good of the country, according to a Reuters report Thursday morning.

On Bay Street, Toronto-Dominion Bank posted a 4.6-per-cent increase in third-quarter profit. Net income rose to $3.25-billion, or $1.74 per share, in the most recent quarter, from $3.11-billion, or $1.65 per share, a year earlier. On an adjusted basis, the lender earned $1.79 per share. Analysts had been looking for earnings by that measure of 80 cents a share, according to IBES data from Refinitiv. TD shares were up about 1 per cent in early trading in Toronto.

Results from Laurentian Bank are also due Thursday.

Thursday’s analyst upgrades and downgrades

In other earnings, Ski-Doo maker BRP Inc. shares jumped 5 per cent a the open after the company posted higher quarterly profit and hiked its outlook for the year. BRP reported profit of $93.3-million 96 cents per diluted share for the quarter ended July 31, up from a profit of $41-million or 41 cents per share in the same quarter last year. On a normalized basis, BRP says it earned 71 cents per share for its most recent quarter, up from 66 cents per share a year ago. Revenue totalled nearly $1.46-billion, up from nearly $1.21-billion a year ago. BRP also now says it expects revenue growth for the year to be 10 per cent to 13 per cent compared with earlier expectations for growth of 9 per cent to 13 per cent. Normalized earnings per diluted share are now forecast to be between $3.65 and $3.80, up from a range of $3.55 to $3.75.

South of the border, Best Buy and Dollar General report before the start of trading. Dell reports after the close.

Overseas, the pan-European STOXX 600 was up roughly 1 per cent in afternoon trading helped by Italy’s steadying political situation. Britain’s FTSE 100 rose 1.02 per cent. Germany’s DAX gained 1.11 per cent. France’s CAC 40 was up 1.39 per cent.

In Asia, stocks had a mixed finish. Japan’s Nikkei edged higher to close at 20,460.93. The Shanghai Composite Index slid 0.1 per cent. Hong Kong’s Hang Seng added 0.34 per cent.

Commodities

Crude prices were steady in early going with a sharp drop in U.S. inventories helping stabilize prices although continuing concerns about global economic growth capped the advance.

The day range on Brent crude so far is US$59.98 to US$60.57. The range on West Texas Intermediate is US$55.43 to US$56.23.

On Wednesday, the U.S. Energy Information Administration reported that crude stocks fell last week by 10 million barrels, far more than the market had been forecasting. Gasoline and distillate inventories fell by 2.1 million. The figures followed a similar report on Tuesday from the American Petroleum Institute, which also showed declining oil inventories.

“The EIA weekly update provided a much-needed shot in the arm to benchmark crude pricing as collapsing imports and healthy exports drove a massive crude inventory draw, which came in well ahead of consensus and just a touch shy of the API survey,” Desjardins analysts Justin Bouchard and Chris MacCulloch said in an early note.

However, worries about the impact of slowing economic growth on crude demand also continues to drag on prices.

“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” Jeffrey Halley, senior market analyst at OANDA, said.

Those growth concerns also kept gold prices near their six-year high. Spot gold was steady at US$1,538.36 per ounce. Bullion touched US$1,554.56 an ounce on Monday, the highest since April 2013. U.S. gold futures were down 0.1 per cent at US$1,547.10.

“Markets are waiting for the next step in terms of trade talks between U.S. and China. Until then, uncertainties continue to be fairly supportive for safe-haven assets, particularly precious metals,” ING analyst Warren Patterson told Reuters.

Silver also rose more than 1 per cent to US$18.53 per ounce, after hitting its highest since April 2017 at US$18.64 earlier in the session.

Currencies

The Canadian dollar was firmer and trading near the upper end of the day’s range of 75.08 US cents to 75.30 US cents as currency markets remained relatively quiet.

Ahead of the start of trading, markets get a reading on the second-quarter current account deficit, although more attention will be focused on Friday’s report on GDP growth for the same quarter.

Statscan says the current account deficit narrowed by $10.2-billion to $6.4-billion in the second quarter. That’s the lowest level since Canada returned to a deficit position in 2008. Separately, the agency said payroll employment fell in June by 10,700 jobs with the biggest decrease being seen in retail and manufacturing.

“Overall, a bit of a mixed bag as the current account numbers support our above-consensus call for Q2 GDP, but the payroll data represent a slight downside risk to June GDP and, as a result, the handoff to Q3,” CIBC economist Royce Mendes said.

On world currency markets, the Japanese yen continued to benefit about market skepticism over a settlement in the U.S.-China trade dispute. The safe haven currency looks set for its biggest monthly gain since May.

Against the U.S. , the yen moved up 0.2 per cent to 105.83 yen. For the month, it is set to gain 2.5 per cent against the greenback.

Britain’s pound continued to wilt after Prime Minister Boris Johnson suspended parliament, raising the possibility of a no-deal Brexit. Early Thursday, the pound was down about a quarter of a percentage point at US$1.2183, nearing a January 2017 low below US$1.2015.

“PM Johnson’s plan to prorogue parliament on September 9 has, not [surprisingly], met with a hostile response, including with the electorate,” Mr. Cole said. “A poll for The Times suggests 47 per cent are against the move and 27 per cent for. A number of legal challenges to the decision will begin making their way through the courts today. The bookies-implied probability of no deal exit has settled around the record high hit yesterday.”

In bonds, U.S. yields moved higher on the latest China-U.S. trade headlines. The yield on the 10-year note was up at 1.489 per cent. The yield on the 30-year note was also higher at 1.963 per cent.

More company news:

Laurentian Bank Financial Group reported a third-quarter profit of $47.8-million, down from $54.9-million in the same quarter last year. The Montreal-based bank says the profit amounted to $1.05 per diluted share for the quarter ended July 31 compared with a profit of $1.23 per diluted share a year ago. On an adjusted basis, Laurentian says it earned $51.9-million or $1.15 per share for the quarter. That compared with an adjusted profit of $59.4-million or $1.34 per diluted share in the same quarter last year. Analysts on average had expected a profit of $1.16 per share for the quarter, according to the financial markets data firm Refinitiv.

Cannabis producer Tilray Inc. says it has signed a deal to acquire Alberta cannabis retailer Four20 in an agreement valued at up to $110-million. Calgary-based Four20 owns and operates six stores in Alberta and has secured 16 additional store locations. Under the terms of the agreement, Tilray will pay $70-million in Tilray class 2 common shares when the deal closes and an additional $40-million in common shares subject to the achievement of certain performance milestones.

Dollar General Corp beat analysts’ estimates for quarterly same-store sales, as more shoppers spent on everyday essentials and seasonal products. Same-store sales rose 4 per cent in the second quarter ended Aug. 2, well above analysts’ average estimate of a 2.43-per-cent increase, according to IBES data from Refinitiv. Net income rose to $426.6-million, or $1.65 per share, from $407.2-million, or $1.52 per share, a year earlier.

Best Buy Co Inc reported a smaller-than-expected rise in quarterly same-store sales, as the biggest U.S. consumer electronics retailer sold fewer video game consoles and other entertainment products. Best Buy’s overall same-store sales rose 1.6 per cent in the second quarter ended Aug. 3. Analysts on average had expected a 2.15-per-cent increase, according to IBES data from Refinitiv. Revenue rose to US$9.54-billion from US$9.38-billion, a touch below expectations of US$9.56-billion. The company also narrowed its full year sales forecast to a range of US$43.1-billion to US$43.6-billion, from a US$42.9-billion to US$43.9-billion range, citing planned further increases in U.S. tariffs on Chinese goods. Best Buy shares were down about 8 per cent in early going.

Abercrombie & Fitch Co cut its full-year sales forecast, accounting for the potential impact of increased U.S. tariffs on Chinese imports, sending its shares down more than 9 per cent in morning trading. The company said it now expects annual sales to be flat to up 2 per cent, down from a previous range of up 2 per cent to 4 per cent.

Economic news

Statscan says the current account deficit narrowed by $10.2-billion to $6.4-billion in the second quarter.

U.S. weekly jobless claims rose to 115,000 from 209,000. The most recent number was in line with economists’ forecasts.

U.S. second-quarter GDP growth was revised down slightly to 2 per cent, from the previous reading of 2.1 per cent. The latest number matched market forecasts.

(10 a.m. ET) U.S. pending home sales for July. Consensus is flat from June.

With Reuters and The Canadian Press

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
BBY-N
Best Buy Company
+0.2%82.03
DG-N
Dollar General Corp
+1.2%156.06
TD-T
Toronto-Dominion Bank
-0.63%81.75
DOO-T
Brp Inc
+5.35%90.95
ANF-N
Abercrombie & Fitch Company
+3.27%125.33

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